When Comparing the Direct Write-Off Method and the Allowance Method

question 60

Multiple Choice

When comparing the direct write-off method and the allowance method of accounting for uncollectible receivables, a major difference is that the direct write-off method

• A) uses a percentage of sales method to estimate uncollectible accounts.
• B) is used primarily by large companies with many receivables.
• C) is used primarily by small companies with few receivables.
• D) uses an allowance account.